I think that some of the faces you have selected in your boundary conditions are not inside of the computational domain.
I have double checked and all parts of the assembly are within the computational domain. I also have no hidden bodies as was suggested in another post.
When validating the definition of a Boundary Condition, the message 'Face [...] is not laying on the boundary between the solid and fluid region' pops up.
Or when validating the definition of a Fluid Subdomain, the message 'Cannot find the faces associated with this item' pops up.
In both cases, the definition cannot be completed.
There are three main reasons for this error message occurring:
1. Simple Reason – The SOLIDWORKS® geometry has been prepared correctly for an internal flow analysis, but you do not selecting a face that is in contact with the flow domain. For example, selecting the outside face of a lid instead of the inner face to apply a boundary condition.
2. Common Reason 1 – Invalid contacts exist between parts in an assembly (there may be an edge-edge or point-face mates between two SOLIDWORKS features)
3. Common Reason 2 – The SOLIDWORKS model is not "analysis ready" yet because openings in the geometry prevent the program from detecting an internal volume (fluid domain) that touches the face you selected.
Check which of the above explanations corresponds to your case, starting from the top of the list.
To check for Invalid contacts, refer to the procedure in Solution ID: S-019593.
To detect small openings in your model, refer to the procedure in Solution ID: S-026938